New Delhi, Sep 5 (IANS): The country's largest lender State Bank of India (SBI) said Wednesday it will cut interest rates on term deposits by 0.50 percent to 1 percent effective from Sep 7.

The sharpest cut of 1 percent will be on the term deposit from 241 days to less than one year period. Interest rate on this term deposit for below Rs.15 lakh amount will be cut to 6.5 percent from the existing 7.5 percent. On amounts above Rs.15 lakh and less than Rs.1 crore, interest rate will be reduced to 7.5 percent from the existing 8 percent.

In most term deposit categories, the reduction in interest rates will be 0.5 percent.

"State Bank of India has decided to revise downwards its retail term deposit rates with effect from Sep 7, 2012," SBI said in a statement. The revision in interest rates is for the deposits up to Rs.1 crore.

In terms of amount, SBI has three slabs of interest rates - below Rs.15 lakh, from Rs.15 lakh to Rs.1 crore and above Rs.1 crore.

For term deposits from seven days to less than one year on amounts below Rs.15 lakh, the revised interest rates will be 6.5 percent.

For term deposits from one year to less than two years, the interest rate will be cut to 8.5 percent from the existing 9 percent.

However, the interest rates on term deposits from five years to up to 10 years period remains unchanged at 8.5 percent.

Of the total nine maturity periods for retail term deposits, the SBI has announced 0.5 percent cut in six categories, while in one category the cut is by one percent.

In term deposit of 181 days to 240 days period, the rate will be cut by 0.75 percent to 6.5 percent, while in one category the rate remains unchanged.